Canada is in the midst of a severe housing affordability crisis. The federal government’s recent announcement of the Build Canada Homes (BCH) agency is being touted as a major step toward a solution. But as someone working in real estate development, I believe it is a misstep—one that both misunderstands the problem and proposes a costly, inefficient remedy.
During the last election campaign, the Liberal Party put forward three big ideas to make housing more affordable: the creation of the BCH agency, a tax credit for rental housing investors (the MURB tax credit), and a 50 percent reduction in municipal development charges. To date, we’ve seen little movement on the latter two. Now, with the launch of BCH, the government is focusing on what I consider the least effective lever.
The core issue is simple: housing is expensive because there isn’t enough of it. We aren’t building enough homes to meet demand, and the reason for that is that housing is over-taxed and over-regulated. Most of these regulations are imposed at the municipal level, with some at the provincial level and very few federally. Taxes, too, are largely applied locally. We are getting in our own way.
The government’s own goal is to double Canada’s housing completion rate—from approximately 250,000 units per year to 500,000. Even if BCH manages to deliver 5,000 units annually, as proposed, that would represent just 2 percent of the needed increase. That’s not nothing, but it is a woefully inadequate response to the scale of the problem.
Worse, BCH seems destined to repeat past mistakes. It isn’t enough to just build affordable housing; the agency is layering on additional requirements: locally sourced materials, “modern” construction methods, and elevated standards for accessibility and energy efficiency.
This is what Ezra Klein has called “everything bagel liberalism”—the tendency of progressive governments to load every policy with extra conditions, thereby increasing cost and complexity. We used to be good at building housing. Fifty years ago, we did it efficiently and at scale. Now, we’ve made it so difficult and expensive that even well-intentioned programs deliver very little for a lot of money.
The Canada Mortgage and Housing Corporation (CMHC) already supports below-market rate housing development through loan insurance programs and favorable financing for rental projects that meet certain criteria. BCH would go further by acting as an active developer. But Canada does not have a shortage of developers. What we have is a system that discourages them from building.
The federal government does have powerful tools at its disposal—it just isn’t using them. For example, it could reform the tax code to incentivize investment in housing. The MURB tax credit was one proposal. Another, suggested by Pierre Poilievre, would allow Canadians to defer capital gains taxes when reinvesting in Canadian assets, including housing. That could be rocket fuel for the construction industry.
Ottawa also oversees the national building code. By simplifying and modernizing it, it could set a model for provinces and municipalities to follow, reducing regulatory friction across the country. And if the government is determined to subsidize below-market rate housing, the most efficient way would be to just buy buildings from private developers through forward purchase agreements—not to become a developer itself. When the government acts as a developer, it inevitably introduces excessive consultation, labour rules, and procurement requirements that drive up cost and risk. Buying completed buildings would be cheaper, faster, and less risky.
The appointment of a former municipal politician to lead BCH feels more political than practical. It signals that the agency may be more about optics than outcomes. That’s not a criticism of the individual, who was basically a pro-housing city councillor—it’s a criticism of the approach.
The seeds of BCH’s failure lies in its misdiagnosis of the problem. The break-even price for most market housing development is too high due to taxes, development charges, and construction costs, which are themselves elevated due to municipal requirements and excessive provincial building codes. As Prime Minister Mark Carney rightly pointed out during the campaign, government taxes alone can account for 30 percent of the cost of delivering a new home. This isn’t a market failure. It’s a government failure. Until we address these underlying cost drivers, no amount of government-led development will make housing affordable.
The upshot: Build Canada Homes is a well-intentioned but misguided effort. Federal attention and money would be better spent on tax reform, regulatory modernization, and cost reduction—not on creating a new agency that risks becoming a symbol of government overreach, inefficiency, and failed policy.
Canada needs more homes. What it doesn’t need is more bureaucracy.
This commentary draws on a Hub podcast. It was edited using AI. Full program here.
Chris Spoke is a real estate investor and the founder of August, a Toronto-based agency that designs and builds digital products.
